1.1 Company Overview
M/s Scan Steels Limited is a public limited company
domiciled in Maharastra, India. The company has its
listings on the BSE Limited in India. The company is
engaged in manufacturing of steel products and in
generation of power for captive consumption.
1.2 Basis of Preparation
[i] Compliance with Ind AS :
The standalone financial statements comply in all
material aspects with Indian Accounting Standards
(Ind AS) notified under Section 133 of the Companies
Act, 2013 (the Act) [Companies (Indian Accounting
Standards) Rules, 2015] and other relevant provisions
of the Act.
[ii] Historical Cost Convention :
The financial statements have been prepared and
presented on accrual basis and under the historical
cost convention, except for the following:
a) certain financial assets and liabilities and contingent
consideration that is measured at fair value;
b) Assets held for sale - measured at fair value less cost
to sell;
c) Defined benefit plans - plan assets measured at fair
value; and share-based payments.
As the year end figures taken from the source and
rounded to nearest digits,the figures reported for the
previous quarters might not always add up to the year
end figures reported in this statement.
1.3 Use of Estimates :
(i) The preparation of the financial statements are in
conformity with Indian Accounting Standards (Ind
AS) that requires management to make judgment
estimates and assumptions that affect the reported
amounts of revenue, expenses, assets and liabilities
and disclosures relating to contingent liabilities as at
the end of the reporting period.
(ii) Accounting estimates could change from period
to period. Actual results could differ from those
estimates. Appropriate changes in estimates are
made as the Management becomes aware of
changes in circumstances surrounding the estimates.
Changes in estimates are reflected in the financial
statements in the period in which changes are made
and, if material, their effects are disclosed in the notes
to the standalone financial statements.
(iii) Estimates and judgements are continually evaluated.
They are based on historical experience and other
factors, including expectations of future events that
may have a financial impact and that are believed to
be reasonable under the circumstances.
1.4 Property, Plant and Equipment, Intangible Assets
and Capital Work-in-Progress
i. Property,Plant and Equipment
a) Freehold land is carried at historical cost. All other
items of property, plant and equipment are stated
at historical cost less depreciation. Historical cost
includes expenditure that is directly attributable to the
acquisition of the items.
b) The whole of the finance charges paid on assets
acquired under Hire Purchase Scheme are considered
as “Unmatured finance charges” under the head “Other
Current Assets” in the Balance sheet. Subsequently, at
the end of the year the portion of finance charges is
transferred to profit & loss account on the basis of the
number of instalments due during the year.
ii Depreciation methods, Estimated useful lives and
Residual value
a) Depreciation is provided on the straight line method
applying the useful lives as prescribed in part C of
Schedule II to the Companies Act,2013.
b) Depreciation on assets purchased/acquired during
the year is charged from the date of purchase of the
assets.
c) An asset's carrying amount is written down
immediately to its recoverable amount if the asset's
carrying amount is greater than its estimated
recoverable amount.
d) Gains and losses on disposals are determined by
comparing proceeds with carrying amount. These are
included in profit or loss within other gains/(losses).
iii. Intangible Assets :
a) Intangible assets are recorded at the consideration
paid for acquisition of such assets and claimed at cost
less accummulated amortization and impairment.
b] Amortisation methods and periods
The entity amortises intangible assets with a definite
useful life using the straight-line method.
iv. Capital Work-in-Progress
Capital Work-In-Progress comprises of the cost of
Fixed Assets that are not yet ready for their intended
use at the reporting date.
1.5 Financial Instruments
Initial Recoginition
Financial assets and liabilities are recognised when
the company becomes a party to the contractual
provisions of the instruments.Financial assets and
liabilities are initially measured at fair value.Transaction
costs that are directly attributable to the acquisition or
issue of financial assets and financial liabilities(other
than financial assets and financial liabilities at fair
value through profit or loss) are added to or deducted
from the fair value measured on initial recognition of
financial assets or financial liability.The transaction
costs directly attributable to the acquisition of financial
assets and liabilities at fair value through profit or loss
are immediately recognised in Statement of profit and
loss.
Subsequent Recognition
i. Financial Assets
a) Measured at amortised cost:
Financial assets are subsequently measured at
amortised cost if these financial assets are held within
a business whose objective is to hold these assets to
collect contractual cash flows and the contractual
terms of the financial assets give rise on specified
dates to cash flow that are solely payments of principal
and interest on the principal amount outstanding.
b) Measured at fair value through other comprehensive
income:
Financial assets are measured at fair value through
other comprehensive income if these financial assets
are held within a business whose objective is achieved
by both collecting contractual cash flows on specified
dates to cash flow that are solely payments of pricipal
and interest on the principal amount outstanding and
selling financial assets.
c) Measured at fair value through profit or loss:
Financial assets are measured at fair value through
profit or loss unless it is measured at amortised cost
or fair value through other comprehensive income on
initial recognition.
d) Equity instruments:
An equity instrument is a contract that evidences
residual interest in the assets of the company after
deducting all of its liabilities. Equity instruments are
recognised at the proceeds received net off direct
issue cost.
Investment in quoted equity instruments are measured
at fair value through other comprehenesive income
on the basis active bid market prices and accordingly
the changes in fair value has been recognised in the
retained earnings as at the date of transiton and
subsequently in the Other Comprehensive income.
ii. Financial Liabilities
a) Financial liabilities are measured at amortised cost
using effective interest method.Financial liabilities
carried at fair value through profit or loss are
measured at fair value with all changes in fair value
recognised in the statement of profit and loss.
b) Interest bearing loans and borrowings are subsequently
measured at amortised cost using effective interest
rate method.Gain and losses recognised in profit and
loss when the liabilities are derecognised.
iii De-Recoginition
The Company derecognizes a financial asset when the
contractual rights to the cash flows from the financial
asset expire or it transfers the financial asset and the
transfer qualifies for derecognition under Ind AS 109.
A financial liability (or a part of a financial liability) is
derecognized from the Company's Balance Sheet when
the obligation specified in the contract is discharged or
cancelled or expires. The entity transfers the difference
between the carrying amount of Financial Liability (Bank
Loan) and the consideration paid in full settlement to
wave off the loan to profit and loss account.
1.6 Inventories :
Raw materials, Stores and Spares, Semi-finsihed
Goods, Traded and Finished Goods
a] Raw materials, components and stores & spares are
valued at cost following FIFO method. Cost includes
purchase price, freight, handling charges and other
directly attributable costs to bring the material to
its present location and are net of duties and taxes
wherever applicable.
b] Semi-finished goods, finished goods and traded goods
are valued at lower of cost or Net realizable value. Cost
includes direct materials, labour and a proportion of
manufacturing overheads based on average cost of
production.
c] Cost of finished goods inside the plant is exclusive of
GST
d] Net realizable value is the estimated selling price in
the ordinary course of business less estimated costs
necessary to make the sale.
1.7 Cash and Cash Equivalents :
For the purpose of presentation in the statement
of financial statements, cash and cash equivalents
includes cash on hand, deposits held at call with
financial institutions, other short-term, highly liquid
investments with original maturities of twelve months
or less that are readily convertible to known amounts
of cash and which are subject to an insignificant risk of
changes in value, and bank overdrafts.
1.8 Contributed Equity :
a. Equity shares are classified as equity.
b. Incremental costs directly attributable to the issue
of new shares or options are shown in equity as a
deduction, net of tax, from the proceeds.
1.9 Borrowings :
i. Borrowings are initially recognised at fair value,
net of transaction costs incurred. Borrowings are
subsequently measured at amortised cost. Any
difference between the proceeds (net of transaction
costs) and the redemption amount is recognised
in profit or loss over the period of the borrowings
using the effective interest method. Fees paid on the
establishment of loan facilities are recognised as
transaction costs of the loan to the extent it is probable
that some or all of the facility will be drawn down. In this
case, the fee is deferred until the draw down occurs.
To the extent there is no evidence that it is probable
that some or all of the facility will be drawn down, the
fee is capitalised as a prepayment for liquidity services
and amortised over the period of the facility to which it
relates.
ii. Preference shares, which are mandatorily redeemable
on a specific date, are classified as Non Current
Financial Liabilities in the “Note 12 - Borrowings " .
iii. Borrowings are withdrawn from the balance sheet
when obligations specified in the contract is discharged,
cancelled or expired. The difference between the
carrying amount of a financial liability that has been
extinguished or transferred to another party and the
consideration paid, including any non-cash assets
transferred or liabilities assumed, is recognised in
Statement of profit and loss as other gains/(losses).
iv. Borrowings are classified as current liabilities
unless the entity has an unconditional right to defer
settlement of the liability for at least 12 months after
the reporting period. Where there is a breach of a
material provision of a long-term loan arrangement
on or before the end of the reporting period with the
effect that the liability becomes payable on demand
on the reporting date, the entity does not classify
the liability as current and if the lender agreed, after
the reporting period and before the approval of the
financial statements for issue, not to demand payment
as a consequence of the breach.
1.10 Trade and Other Payables :
These amounts represent liabilities for goods and
services provided to the entity prior to the end of
financial year which are unpaid. The amounts are
unsecured and are usually paid within 90 days of
recognition. Trade and other payables are presented
as current liabilities unless payment is not due within
12 months after the reporting period. They are
recognised initially at their fair value and subsequently
measured at amortised cost using the effective
interest method.
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